Not surprisingly but largely overlooked in the reports on the plan announced by the White House several weeks ago, the biggest opponents (other than House and Senate Republicans, that is) to any substantial corporate tax overhall come from the corporate world itself: They are the companies, industries, and sectors that currently benefit from the current system at the expense of the corporations, businesses, industries, and sectors that don't get the same special treatment.

And that's just the beginning.

The best way to understand why, regardless of who is president and which party controls Congress, the politics of corporate tax reform will make it much harder to enact any proposal than would seem likely at first glance is to consider the most extreme proposal possible: Rather than just tinker with the corporate tax code by "reforming" it, why not just do away with the whole thing.

In other words, the world would be a much better place for those who pay corporate income taxes. The only problem: This would be a disaster for many large and extremely influential parts of the corporate tax world.

In fact, the current corporate tax system is a boon for some companies because they have a negative tax rate and get payments from the government through it.

Second, think of all the accountants and tax lawyers who have devoted much of their lives to helping their employers and clients comply with the tax laws, regulations and rules. What they do for a living would suddenly become unnecessary in much the same way that saddle makers found the demand for their product greatly decreased after automobiles replaced horses as the primary mode of transportation.

Add to that all of the other workers in the tax departments who work along side the CPAs and lawyers and would wake up one morning to find their education, skills, and expertise to be superfluous.

Third, add those who lobby Congress on corporate taxes. I haven't been able to find statistics on this, but my guess from being in Washington for more than three decades is that substantially more than half of all lobbying is related in some way to changing corporate tax provisions. By definition, these are influential people who know how to have an impact on public policy issues.

Fourth, consider that a significant portion of a major federal agency -- the Internal Revenue Service -- is devoted to the corporate tax code.

Fifth, a smaller and no doubt less influential group would be those who teach corporate taxes to undergraduate and graduate students who would find little to no interest in their courses. They would quickly would have to go from teaching law, public administration, and economics to history if, that is, there were any positions available.

Sixth, members of Congress and congressional candidates and political party committees would no longer get campaign contributions from corporate political action committees seeking changes in the corporate income tax code because there would be no corporate income tax to change. (My guess is that this could be the biggest campaign finance reform plan ever considered.)

There are more. For example, consider the companies that provide written materials on corporate taxes to attorneys and CPAs.

All of this points out that what might appear to be an absolute political slam dunk -- not just reforming but actually eliminating a tax -- isn't at all guaranteed to happen. And that's the situation for doing away with it completely. Something like the Obama plan, which would offset a reduction in the top rate by eliminating some special tax breaks, would be even more controversial.

Bottom line: If it happens at all, tax reform is going to be far more controversial and take a great deal longer to enact than anyone is currently assuming. Think multiple years rather than months. Also think that enactment is anything but certain.

The only way this could work politically is if the capital gains tax were equal to earned income tax. Basically as long as corporate profits remained in corporate "hands" it would be untaxed, but as soon as it was passed to any individual in any form it would be fully taxed as personal income. Of course, then just about the only restraint on corporations spending money to benefit their executives would be the oversight of the shareholders, and we know what that's worth.

I agree if we eliminated the corporate income tax we should treat dividends and stock sales as regular income. But we should also create new higher level brackets (say $1M, $5M, $10M, and $15M+) with a top tax rate in the high 30's. It makes little sense to lump a dentist making $325k a year in with an investor making $10M a year off capital gains.

Generations of rent-seeking got the corporate income tax structure messed up. Now, as outlined in the the blog post, the rent-seekers are lined up to oppose losing their goodies.

Which of course demonstrates one of the strongest conservative arguments against expanding the scope of government control over society--someone gains a benefit and will oppose reversing a particular expansion, even if it is generally accepted that the expansion turned out to be bad for society.

Of course you're right, and those who want "smaller government" in the abstract are right. But it's all theory and no practice. The actual politicans who claim to be conservative have been far more responsible for the complexity of the tax code than the Democrats. Now when I say this I don't mean they are more responsible for bigger government overall or for our debt (although you could make that argument)what I mean is that the GOP tends to structure it's giveaways to its favored industries and people as tax deductions, tax credits and other "tax spending" while the Democrats are more likely to actually send checks out of the treasury to support those they want to favor. But it's a distinction without a difference.

What bothers me right now in regards to our political choices is that the nefarious influence of money, corporations, lobbyists etc. is the main problem with our government - the complexities, regulations and general feelings of deep unfairness stem from that. Yet we have one party that wants governemnt to do more, and the other that claims it wants government to do less - but without a shread of evidence that this assertion is true. I know, the answer is we can vote for a third party - "if everyone just decided to do this together" is the response heard 'round the internet - but it's just not possible. The game is rigged, you can vote for Vanilla or French Vanilla, tutti frutti is a fiction.

Without corporate income taxes the tax deduction for interest income would no long give debt an advantage over equity. Corporations would move large public placements to preferred stock rather than bonds, reducing the risk in their capital structures.

At least you are honest. By not even including the non-corporate taxpayer in the list of those who would object, you recognize that the average taxpayer will have nothing to say about this decision. Just left to pay the bill.

So if I have my own business or investments and I want to shelter money from taxes, I can set up a corporation and as long as the assets stay in the corporation, I will pay no tax. I'm sure the tax shelter industry will take off with this one.

would be to require shareholders to "realize" excess retained earnings as a capital gain each year. This would strongly encourage corporations to pay out profits in dividends, because otherwise taxpayers would be taxed on income they wouldn't have in hand.